Buy Gujarat State Petronet; target of Rs 115: SMC Global

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Buy Gujarat State Petronet; target of Rs 115: SMC Global

SMC Global is bullish on Gujarat State Petronet (GSPL) and has recommended buy rating on the stock with a target of Rs 115 in its October 07, 2011 research report.

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SMC Global is bullish on Gujarat State Petronet (GSPL) and has recommended buy rating on the stock with a target of Rs 115 in its October 07, 2011 research report.

"Gujarat State Petronet Limited's (GSPL) management has indicated that the volume of gas to be supplied will increase from around 35 mmscmd as on Mar'11 to around 45 mmscmd in the next couple of years. The company will continue to roll out its network in Gujarat. The current pipeline network is around 1900 km which will be increased to 2100 km by year end overall to 2400 km in next 5 years, with capex of around 600-700 crore p.a.

The management has indicated that the volume of gas to be supplied will increase from around 35 mmscmd (million standardcubic meter day) as on Mar'11 to around 45 mmscmd in the next couple of years. The company will continue to roll out its network in Gujarat. The current pipeline network is around 1900 km which will be increased to 2100 km by year end overall to 2400 km in next 5 years, with capex of around 600-700 crore p.a. In July 2011, GSPL-led consortium gets 12,500 cr gas pipeline contract. GSPL has bagged the contract for the 1,585-km Mallavaram- Bhilwara pipeline, 1,670-km Mehsana-Bhatinda pipeline and 740-km Bhatinda-Jammu- Srinagar pipeline. The pipelines will carry around 95 million metric cubic metres of gas per day. The projects are expected to be completed within 36 months from the date of award of the letter of authorisation. During the year ended March 2011, the Company has successfully completed commissioning of approx 250 kms of pipelines under various pipeline projects namely: Darod - Jafrabad, various spurs connecting customers like Sumangal Glass, Nirma, GACL Dahej Connectivity (Roxul), IOCL, IPCL, Ajanta, EOL (Refinery), Met Trade.

The company has managed to achieve fast track growth in a short period of time with a lean manpower strength on account of its well thought out strategy of developing major pipeline projects on EPC (Engineering, Procurement and Construction) Model. Company's results were better than expected as its volumes as well as tariffs grew and had the benefit of higher wind power capacity. Net profit of company rose 30.70% to 137.37 crore in the quarter ended June 2011 as against 105.10 crore during the previous quarter ended June 2010. Sales rose 12.91% to 284.29 crore in the quarter ended June 2011 as against 251.79 crore during the previous quarter ended June 2010. Tax benefits in its wind-power segment pushed up revenues for the company.

Company's results were better than expected as its volumes as well as tariffs grew and had the benefit of higher wind power capacity. Net profit of company rose 30.70% to 137.37 crore in the quarter ended June 2011 as against 105.10 crore during the previous quarter ended June 2010. Sales rose 12.91% to 284.29 crore in the quarter ended June 2011 as against 251.79 crore during the previous quarter ended June 2010. Tax benefits in its wind-power segment pushed up revenues for the company. The current trend is up and all orders on the long side may be considered. The stock closed at 104.30 on 05th October 2011. It made a 52 week low 76.60 and 52 week high of 128.25. Buy around 105.20 with a closing below stop loss of 97 levels for the target of 115," says SMC Global research report.

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To read the full report click on the attachment